FX.co ★ ECB Set to Raise Interest Rates

The European Central Bank is widely expected to raise interest rates by 25 basis points at its June 2026 meeting, as policymakers grapple with surging energy costs and the risk of persistently high inflation in the coming months, driven by the war in Iran and the closure of the Strait of Hormuz. This would be the first rate increase in a year and comes on the heels of quickening price growth in the eurozone: consumer prices rose 3.2% in May, up from 3% in April and well above the ECB’s 2% target. Core inflation, which strips out volatile energy and food prices, also picked up, climbing to 2.5% from 2.2% in April.

Alongside its rate decision, the ECB will publish updated macroeconomic projections, with analysts expecting substantial upward revisions to inflation forecasts for 2026 and 2027. Investors will scrutinize President Lagarde’s press conference for signals about the future policy path. Markets currently anticipate two to three rate hikes this year, although uncertainty remains after data showed the eurozone economy contracted in the first quarter of 2026.